White House cryptocurrency adviser Patrick Witt is urging Congress to move quickly on the Digital Asset Market Clarity Act, calling it a “pro-regulatory, pro-law enforcement bill” as lawmakers face a narrowing window to act before midterm elections and the end of the current legislative session.
The bill, widely referred to as the Clarity Act, would overhaul how digital assets are regulated in the United States, setting clearer oversight lines between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), and reshaping anti-money laundering rules. Supporters say its passage could define the legal framework for crypto markets for the next decade; failure could push any comprehensive effort out to 2030 or beyond, according to key backers.
Virtual town hall highlights urgency and political stakes
Momentum around the bill was on display during a virtual town hall hosted by the Blockchain Association, where Witt appeared alongside Sen. Cynthia Lummis and Rep. Tom Emmer to press for immediate action.
Lummis warned that if Congress fails to pass the measure this year, the combination of election-year politics and competing legislative priorities could keep the proposal from returning to the agenda until well into the next decade. The act still needs to clear the Senate Banking Committee and then secure 60 votes on the Senate floor, a high bar that will require bipartisan agreement on several contentious provisions.
Core aim: clear who regulates what in digital assets
Formally titled the Digital Asset Market Clarity Act, the bill seeks to end years of regulatory uncertainty by dividing primary oversight of digital assets between the SEC and CFTC. The current framework has left traders, platforms, and developers navigating overlapping enforcement from both agencies, often through court battles rather than clear rulemaking.
A key feature is a “mature blockchain” test that would help determine when a token is treated as a commodity under CFTC jurisdiction rather than as a security overseen by the SEC. Once a network meets specified decentralization thresholds, its native asset could be reclassified as a digital commodity, potentially moving it out of the SEC’s stricter securities regime that has driven many high-profile enforcement cases.
Non-custodial developers at center of enforcement debate
One of the most contested elements is the Blockchain Regulatory Certainty Act, which is folded into the broader package. That measure, championed by Emmer, would establish that non-custodial software developers and certain service providers are not “money transmitters” and therefore should not be regulated like banks or payment firms when they do not hold customer funds.
Backers argue this safe harbor is essential to keep development activity in the United States, noting data that the U.S. share of open-source blockchain developers has dropped from 25% in 2021 to 18% in 2025. They say regulating code writers as financial intermediaries has chilled innovation and driven talent overseas.
Law enforcement officials and some lawmakers disagree, warning that carving out non-custodial actors could weaken the government’s ability to investigate financial crimes. They contend criminal networks increasingly rely on decentralized tools that sit outside traditional banking channels.
Anti-money laundering concerns drive opposition
Concerns about anti-money laundering safeguards are driving some of the most vocal opposition on Capitol Hill. Sen. Catherine Cortez Masto has come out against the measure, arguing that certain provisions could impair authorities’ capacity to trace illicit flows and recover stolen or sanctioned assets.
Critics say the bill, as originally drafted, risked creating gaps in the financial surveillance framework just as digital asset usage grows in both legitimate commerce and criminal activity. They warn that easing obligations on some participants could make it harder to follow funds across complex transaction chains.
Witt has responded by stressing that recent revisions, negotiated with lawmakers and regulatory agencies, are designed to reinforce—not loosen—compliance and enforcement tools. He argues the latest text provides regulators with clearer authority while also giving legal certainty to market participants.
Stablecoin rules emerge as major fault line
Beyond enforcement powers, the bill’s path is complicated by sharp disagreements over how to regulate stablecoins, the digital tokens pegged to assets such as the U.S. dollar that underpin much of the trading and payments activity in crypto markets.
Banking trade groups have pushed back strongly against draft language they say would let crypto firms issue yield-bearing stablecoin products that compete directly with bank deposits, but without being subject to comparable capital, liquidity, and supervisory standards. They argue this would create regulatory arbitrage and potential systemic risk if large stablecoin issuers face stress without bank-style backstops.
The stakes are rising with market growth. The stablecoin sector has more than doubled since the start of 2025, from about $150 billion to more than $300 billion in circulation. That rapid expansion has turned stablecoin oversight into a central political and regulatory fight, and a key obstacle to a broader market structure deal.
Trump’s crypto ties add political complexity
The political backdrop is further clouded by former President Donald Trump’s reported financial exposure to digital assets. Estimates suggest his family’s crypto-related net worth has climbed by billions in recent years, at the same time his public stance has shifted sharply in favor of the sector.
Some lawmakers and policy watchers say those holdings and pro-crypto messaging are influencing the legislative push from factions aligned with Trump, adding another layer of partisanship to an already heated debate. Supporters of the bill counter that the need for regulatory clarity predates Trump’s involvement and is driven by market realities rather than personal portfolios.
Revisions aim to ease regulatory and political concerns
Witt says negotiators have made targeted changes in recent weeks after consultations with both regulators and congressional offices. According to him, these adjustments tighten compliance obligations in certain areas, clarify the scope of law enforcement access to data, and better define the responsibilities of intermediaries under the new regime.
Those revisions are intended to smooth the legislation’s path through the Senate Banking Committee, where members from both parties have signaled unease about weakening anti-money laundering standards, undermining bank oversight, or granting undue advantages to crypto firms.
What is at stake for traders and markets
For traders and market platforms, the outcome could reshape how digital assets are launched, traded, and supervised in the United States.
Supporters say passage would create “rules of the road” that reduce legal uncertainty and compliance ambiguity. Clearer boundaries between SEC and CFTC oversight, combined with defined treatment of mature blockchains and non-custodial services, could make it easier for major trading venues and institutional firms to expand involvement in Bitcoin, Ethereum, stablecoins, and a broad range of digital tokens.
They argue that a statutory framework would gradually replace the current enforcement-led approach, in which the legal status of many assets and activities is set through case-by-case litigation, settlements, and agency guidance.
Opponents counter that moving too quickly, or carving out broad exemptions, could open new loopholes for fraud, sanctions evasion, and market abuse. They caution that once enacted, a sweeping structure could be difficult to revise, locking in vulnerabilities as technology and market practices evolve.
Next steps: narrow timeline, high bar
The coming weeks will determine whether Congress can find enough common ground to move the Clarity Act forward. To advance, the bill must survive committee scrutiny, secure compromises on stablecoins and law enforcement powers, and then reach the 60-vote threshold in the Senate.
If lawmakers succeed, the United States could soon have a foundational digital asset statute that reshapes how crypto markets operate and how regulators oversee them. If talks break down, the status quo of fragmented oversight and regulation by enforcement is likely to persist, leaving traders and firms to navigate a patchwork of court rulings and agency actions for years to come.
For deeper insight into US crypto policy shifts shaping this bill, explore the possible future of crypto regulation in the US.
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